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"Global Shock Absorber" China Holds Currency Stable, Margin Debt Rises For 7th Day

Tyler Durden's picture




 

Offshore Yuan continues to trade at a discount to onshore against the USD (imply a modest further devaluation is due) but the spread is narrowing and today's practically unch Yuan fix is dragging USDCNH lower (stronger Yuan). Yesterday's afternoon session ramp in stocks managed to extend its gains as margin debt rises for the 7th straight day. The PBOC injects 120 bn Yuan liquidity via 7-day reverse-repo (notably more than the 50bn maturing), as HSBC's Stephen King concludes, the message from last week's surprise devaluation is clear - China no longer wants to play the "global shock absorber" role - instead is more focused on domestic instability... and there is no other nation yet willing (or able) to shoulder the responsibility.

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3966 AGAINST U.S. DOLLAR

And offshore Yuan is fading...

  • *SHANGHAI MARGIN DEBT RISES FOR SEVENTH DAY
  • *CHINA'S CSI 300 STOCK-INDEX FUTURES RISE 0.7% TO 4,015.4
  • *PBOC TO INJECT 120B YUAN WITH 7-DAY REVERSE REPOS: TRADER - The most since February

The People’s Bank of China stepped up injections via reverse-repurchase agreements Tuesday to offset a tightening in the money market.

 

The central bank sold 120 billion yuan ($18.8 billion) of seven-day reverse repos, according to a trader at a primary dealer required to bid at the auctions. That compared with 50 billion yuan maturing Tuesday.

Rather ominously HSBC's chief economist Stephen King has a common-sense explanation for how China ended up here...

... and where we go next...

China’s role as a “stabiliser” for the global economy has contributed to instability within China itself.

 

 

Yes, the global economy has done better as a consequence of China’s behaviour but, for China, there have been significant costs: an overheated property market, a substantial increase in indebtedness, a roller-coaster ride for the stock market, a highly leveraged shadow banking system and a declining marginal rate of return on capital spending...

 

It is easy to criticise China’s internal imbalances. Doing so without taking into account the role of those imbalances in stabilising the global economy is, however, a major mistake. It doubtless makes sense for China now to address its internal imbalances. Yet, in doing so, the rest of the world needs to find a new shock absorber. It’s not at all obvious whether any economy is really up to the task.

Simply put, a stronger USD will crush an already fragile US economy and Europe is hardly ready for a strengthening currency and to 'absorb' the world's deflationary pressures. With no obvious shock absorber on the horizon, China just passed the hot potato back to The Fed - hike rates, help the world stabilize at the cost of the domestic economy... or don't and currency wars escalate (not helping US) and global deflationary pressures hit (just as we are seeing in commodities and high yield bonds).

 

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Mon, 08/17/2015 - 21:32 | 6437637 Hitlery_4_Dictator
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gonna be a fun ride either way and by fun I mean, shitastic. NO amout of preparing will help. Read this: http://www.amazon.com/One-Second-After-William-Forstchen/dp/0765356864

Mon, 08/17/2015 - 22:02 | 6437711 I MISS KUDLOW
I MISS KUDLOW's picture

What does China know that we don't? Something maybe coming down the pike, they don't want any hot money,,,,,those bankers like it fast

Tue, 08/18/2015 - 03:07 | 6438183 kiwigal
kiwigal's picture

Chinese markets just closed down over 6%. Something more going down there. Look out U.S. markets when opened.

Mon, 08/17/2015 - 21:31 | 6437649 Stormtrooper
Stormtrooper's picture

How about North Korea? It's time for them to carry some of the load.

Tue, 08/18/2015 - 01:46 | 6438135 Blank Reg
Blank Reg's picture

Yea. From what I've read, their glorious leader can do ANYTHING!

Mon, 08/17/2015 - 21:34 | 6437656 nmewn
nmewn's picture

"China no longer wants to play the "global shock absorber" role - instead is more focused on domestic instability..."

Clearly a disturbance in the farce!

Mon, 08/17/2015 - 21:56 | 6437704 Son of Captain Nemo
Son of Captain Nemo's picture

Clearly a disturbance in the farce!

So disturbing a farce in fact that someone in the U.S. "eagles nest" took the initiative to assist the PBOC last Wednesday in Tianjin with a rather spectacular warning when it was official that they would be devaluing their currency after of course those other interested Western parties tried to help the Chinese market(s) with some much needed short selling!

This will all end well.

Mon, 08/17/2015 - 22:01 | 6437716 nmewn
nmewn's picture

My view of the Chinese government is the same as my view of the US government. However, the Chinese government has over a billion hands THEY'RE trying to keep from around their throats.

Totally different numbers ;-)

Mon, 08/17/2015 - 21:50 | 6437693 matermaker
matermaker's picture

I'm placing my bet on middle of September.  All the religous and end of the world juju going on.  The Pope crashing at the White house then hitting the UN circuit for Agenda 2030 to be announced.  The FOMC right in the mix.  The deadline for the Senate vote on the Iran treaty[and to see what the Jews there after, they love wars on holidays].

I figure shit will blow up middle to second half of next month.  Then enter the IMF with a new currency basket for international settlement and whatever else 'they've' come up with.  While it is possible the new scheme arrives out of a chaotic vacuum, I'd imagine it's already been thought up and planned out well.

Mon, 08/17/2015 - 22:37 | 6437797 Uber Vandal
Uber Vandal's picture

Just for fun, look up the number 266.

Such as which day September 23 is and which number this Pope is.

Of course, all just random, meaningless numbers, but fun to ponder if there is a deeper meaning.

Mon, 08/17/2015 - 22:51 | 6437831 matermaker
matermaker's picture

another fun one is type in 9/23/2015 into google maps.   see what comes up.   majority of the time it comes up on CERN.  I do find all the juju going on about the time a little unnereving, but that stuff never works as well as facts, for me.

Tue, 08/18/2015 - 05:52 | 6438274 MSimon
MSimon's picture

The problem with gold is that it is also an industrial (mainly electrical and electronic) metal.

Mon, 08/17/2015 - 22:01 | 6437712 lasvegaspersona
lasvegaspersona's picture

hmmmn

gold could stabilize the world economy....after all it's price is arbitrary...let it function as the reserve and I'm sure a suitable price will emerge...

it is that simple...try it...just quit messin' with the market and watch!

Mon, 08/17/2015 - 22:41 | 6437815 Make_Mine_A_Double
Make_Mine_A_Double's picture

I look at it as China seeing significant weakness domestically took the initiative and did the deed now they do the 'good cop/bad cop ' and stabilize to an extent and tweak as necessary.

They have check mated the Fed, but Yellin will stand there with her dick in her hand the other thumb up her ass. No hike in Sept.

Tianjin (if you've had any direct experience in China) was the usual F Troop cluster fuck just louder and more colorful than usual.

Mon, 08/17/2015 - 23:24 | 6437912 DeepFriedLizards
DeepFriedLizards's picture

Conspiracy can be good for the soul.  Heaven knows an idiot like Obama and the MIC would be crazy enough to do this if they could.

http://www.naturalnews.com/050816_Tianjin_explosion_space-based_weapons_military_retaliation.html#

 

 

Mon, 08/17/2015 - 23:35 | 6437928 laomei
laomei's picture

The domestic deflation has been pretty good stuff to be honest.  Food prices have stopped rising for one.  The property bubble in non-major markets has popped, while in the 1st tiers it has at least paused allowing for the markets to catch up.  

 

Incomes continue to rise rapidly.  In Beijing for experienced and legitimate IT workers, salaries are around $50,000 a year now. In Silicon Valley it would be possible for them to net ~$150k, however once taxes and basic living expenses are taken out, Beijing is still the better deal for everyone (go ahead, rent or buy a decent place in san fran for under $50k a year, i DARE you to try).

 

Unskilled service industry wages area also going up, but they are failing to catch up, and honestly that's a good thing.  The cities have grown by insane amounts in the past 15 years.  They have grown to the point where the government is working on ways to cap that growth and force marginal migrant residents back to where they came from.  Limiting school access for their children, restricting their abilities to buy property, these are the big ones and they are tightening the screws.

 

If you follow Xi's actions, he's going a bit of "Cultural Revolution" Lite.  And it's rather deserately needed if China is to have any future worth having.  Before getting into that, here's what the Cultural Revolution was all about, and before that, we have to understand the Great Leap Forward:

  • Mao was a dumbass naive dreamer who thought that the Great Leap Forward would work.  He saw that the US went from regional to global power while ramping up steel production and wanted to copy it.
  • Steel was funny, everyone knows about it, but everyone blames Mao for the idea.  It was not Mao's fault entirely.  Mao was pushing the steelworks to increase output, and some dipshit named Zeng Xisheng showed off a backyard steel furnace that had been supplied with legit steel to fake the output.  Mao, being a dumbass and having noone around him willing to tell him this was bullshit, fell for it, and well... you know the rest.
  • Mao wanted to decentralize production because centralized production was a big fat juicy target, it allowed local officials to create fiefdoms around it, and logistics in China was not a thing that existed
  • At the same time, Mao wanted to boost farm output.
  • The problem here is that Mao was a fucking fool who had so much power that everyone wanted to jam their tongues up his asshole as far as possible.  Cadres wanted, obviously, to be closer to the reigns of power, and that meant you had to show good stats and get promoted.  So, they made up silly quotas and submitted them as official.  Of course, once others exceeded their targets, simply meeting their own targets was a face-losing proposition. So they falsified them.  This was done by exploiting every loophole that could be found.  Borrowing crops for the purpose of accounting (and then returning it), or the same with steel and everything else.
  • It was made even worse by following hokum "science" that sounded good politically but was pure bullshit in reality
  • Hit a few bad years, but the quotas... cannot possibly allow them to go unmet, it might make Mao upset, especially if others around you are still willing to lie.  Mao thinks there's more than enough food, no one is willing to say otherwise and oops, people starve.  Mao realizes this now, and basically doubles down deciding that having some starve to death while others stay healthy is better than everyone slowly starving to death.
  • OK, so GLF was a fucking failure, what of it?  Mao basically lost faith in the system he helped setup

Onto the Cultural Revoution

  • Mao made enemies once seeing that everyone was a fucking liar and lost faith in the system
  • Appealing to the masses of course was phase two and that was the basis of the CR
  • If the system was unable to police itself, then let the people police the system directly and have no higher authority
  • Problem here is that Chinese people are fucking sheepish lemmings.  Ask them to think for themselves and it's chaos.  They love to be led
  • Smashing up old shit, the MEANING was that Mao realized that corruption and all that bullshit is ingrained in society and has gone on since China existed.  To move forward, it had to be smashed.  Of course, the morons took it all literally and decided to smash up everything to make themselves, once again "apear better to Mao".. sound fucking familiar?
  • It got entirely out of hand and the way to deal with it was to send the red guard to the countryside to "learn" from the underclass.  It was really just about getting them the fuck out of the cities so sanity could prevail.

Lessons learned that are being applied from what I can see right now:

  • Raise that nationalist bent a bit to weather the coming downturn without seeing a civil war (focus on external enemies and internal political enemies).  
  • Crack down on corruption to a degree, can't do it too much or you won't have a government left, there are no saints here.  
  • If you see how they are working to effectively cap the city sizes, they want nothing but the crème de la crème from now on.  Everyone else, send em back to the countryside and their dissatisfaction with it will hopefully power a bottom up modernization process (the government is ACTIVELY encouraging this if you pay attention). 
  • Major industries are being centralized now that the infrastucture is in place to support them, undoing the remaining vestiges of the GLF
  • Minor industries are being promoted in decentralization efforts and to send jobs to the countryside that will keep the population in place

Agriculture is seeing a revolution as well right now.  It's in vogue now for people in the cities to rent a small patch of ground and basically pay the farmers to tend to it, or pre-buy food deliveries.  This is your safe, organic, non-GMO freerange stuff.  Supermarkets are being pushed to the limits due to online shopping which does next-day or same-day delivery of basically everything for cheaper and higher quality with better promotions.  Dairy is about dead now.  It kinda sucks to see the efforts of some rather famous expats all gone to waste in this area, but what comes next will be far better.  Euro and Aussie milk is just cheaper now.  It's literally cheaper to buy imported milk now.  And even when that economic factor goes away, expectations have permanently risen.  It means that the domestic industry must be torn down and rebuilt to higher standards while being cheap.

See all that shit going on right now, I think China is currently very aware that there's a reset coming.  Without a reset things are just going to get worse and worse and worse for everyone.  The can will be kicked as long as possible though.  In this age of information here's the problem.  The FIRST great power to hit the reset button will probably end up fucked for a long time.  They will be blamed entirely for what is going to unfold.  It will NOT be a pretty thing and it's very likely there will be some rather nasty wars.  That nation that hits the button will be blamed and that blame will carry on for a long time.  The SECOND nation to hit the button though, they will come out in the best situation.  They were simply forced to reset by the FIRST nation.  All problems can be blamed on the first nation.  Furthermore, the first nation to hit the button will be seeing their assets crater while everyone else is still playing, meaning that they will get raped.  If they enact protectionism to stop it, they will be locked out for a long time from the international system, and it could very well lead to war.

And there you have it.  This is a fucked up race where everyone wants to finish second because 1st place gets raped in a way that would make India blush.  The US and EU seem to be in a pact to avoid eating that bullet.  Japan has no real friends in this and are a target to be the first to fall, although poltically everyone is focused on China.  Russia is in the mix as well, but it has been downplayed as a minor economy for so long that it wouldn't really register, and due to what Russia has, it simply wont fall anyways.  China isn't going to be first.  The rest of the BRICS (BIS) are so minor that they really do not matter all that much.

China moves could very well setoff a 1997 repeat in Asia.  SEA has some serious issues and lack of market depth to hide them.  Any significant move by China can set them off.  The Asia Pivot by the US is meant to inject politics into this.  Making it politically more difficult for China to fuck over SEA, changing it from economic disputes into land and border disputes.  This makes for better propaganda.  For example: Chinese moves result in SEA financial crisis.  Japan ends up eating the first reset bullet.  The fallout will make China's action MILD in comparison.  Sort of the way that the filipinos seem to forget about the US-led genocide after Japan moved in.  With Japan playing the bad guy, there is a power vacuum. The US does NOT want to see China fill that vacuum.  The US wants the US to fill it, or at least prevent Chinese power from solidifying in the region.

 

Remember, the first one to be forced to hit the reset button will be blamed for it all, the facts don't matter.  The Second across the line gets to emerge first, without taking the blame, and impose a new system.  The EU-US pack is based on the EU not controlling much of anything after the reset.  The EU just wants to survive in one piece, without US backing that won't happen.  In return, they give the US support, the US is trying desperately to end up the winner in all this.  That's what TPP and all related deals are about.  Get them mainly hammered out pre-reset, and in a post-reset world while everything is going to shit, it offers a new set of rules.  Those rules greatly benefit the US economy above all others.  What has been leaked so far is obviously horrible for all others involved.  So why are they even entertaining it?  Because they know it's about to all go to shit, and if they get this negotiated in advance, it might be just enough of a structure to get them through the reset without an implosion, while deferring to US supremacy.

China is the wildcard here.  China's the one that can fuck it all up.  See all the hacking accusations and the propaganda to portray them as Nazis?  Crying about the islands.  Attempts to destabilize the nation in ways that result in any reaction being further attacked?  It's not a fucking coincidence.  Ideally, the US would LOVE to see China take that first place ribbon, but realistically it's gonna be Japan.  The propaganda and psyops efforts are in place to "share the blame" when that big red shiny button gets smacked.   Making it easy to shift Japan-hate over to China, or to boost the China-hate if somehow China is forced to reset first or thinks for a moment that they are in a position to "get away with it".

 

And that's what it all really boils down to right now.  If the US wins this, they will lock down trade rules for a good long time, ensuring the dominance of a system they control with the TPP, TIPS, and others.  If China wins, there's the New Silk Road system that will link the world, see trillions in development deals over a few decades (for a freshly reset global economy, this would be welcomed by all), and a flat out new global trade system that sets China as the main hub for it all in Asia, Europe, Africa and South America.  The US will be forced to isolate or play along.  If China loses this, it will probably just implode (see the hillary comment of china only having 5 years left).

 

Does this shit all make sense to y'alls yet?  Cus this is EXACTLY what's going on in the world.  Everything else is distraction.  The major points of this are being IGNORED ENTIRELY by the media.  Yes, I know, shiny tin foil hat and all that, but the pieces all fit together very well.

Tue, 08/18/2015 - 00:26 | 6438014 HL Shancken
HL Shancken's picture

An awful lot of words for someone who has no idea what he's talking about.

Tue, 08/18/2015 - 00:29 | 6438019 HL Shancken
HL Shancken's picture

...The Chinese Communist goal was clearly stated at the beginning, in 1977, when Deng Xiaoping explained the strategy of opening economic relations with the West. Deng told the CCP Central Committee that they were engaged in “the international united front struggle” which was a strategy about which the “American imperialists” know absolutely nothing. “We belong to the Marxist camp,” he explained, “and can never be so thoughtless that we cannot distinguish friends from enemies.” According to Deng, President Nixon and President Ford were enemies, as well as President Carter. All future “American imperialist leaders” were also enemies. “What we need mainly is scientific and technical knowledge and equipment,” he said. In the future, America “will have no way of avoiding defeat by our hands.”

The strategic thinking of the Chinese Communist leadership holds that as long as America continues to enrich China, and as long as China can build its military power, then peace is workable. But when the economic wellspring runs dry and the Sino-American partnership has exhausted its profitability, then peace becomes unworkable. Rising discontent within China must then be diverted. The natural course would be for the people to hold the country’s leaders responsible, and to remove them from power. Many of these leaders would be tried as criminals, and would lose their heads. The only alternative to this would be war with the United States. This course automatically shuts down the Chinese democracy movement, which would have to choose between China and America in the course of a life-and-death struggle. In such a contest, the Chinese Communist Party automatically wins the assent of nearly all Chinese – including democrats.  

And so, the best course for a failing Chinese economy is war. One might ask what kind of war? In a secret 2005 speech given by Chinese Defense Minister Gen. Chi Haotian (titled “War is not far from us and is the midwife of the Chinese century”), a  biological attack on the United States was suggested as optimal. “It is indeed brutal to kill one or two hundred million Americans,” said Gen. Chi. “But that is the only path that will secure a Chinese century….” Having already noted that millions of Chinese would die if the Chinese economy collapsed, Gen. Chi explained that the only way out for China was to “teach the Chinese people to go out” (i.e., attack the United States). “We, as revolutionary humanitarians, do not want deaths,” said Chi. “But if history confronts us with a choice between deaths of Chinese and those of Americans, we’d have to pick the latter….”

Worried about the Chinese public’s reaction to the mass extermination of Americans, the Chinese Communist Party conducted an online survey through an intermediary. “[W]e wanted to know whether the people [of China] would rise up against us if one day we secretly adopted resolute means to ‘clean up’ America,” Gen. Chi explained. The survey asked if it was acceptable to shoot prisoners of war, along with women and children. If an overwhelming majority approved of such measures, “then they would approve our ‘cleaning up’ America,” said Chi.

The curious American reader might ask how the Chinese public reacted to the survey. “What turned out to be comforting,” noted Gen. Chi, “is they [the Chinese public] did not turn in a blank test paper. In fact, they turned in a test paper with a score of over 80. This is the excellent fruition of our Party’s work in propaganda and education over the past few decades.”

And so, if China’s economy stops growing, America should expect that its relations with China will deteriorate. This is based on the internal logic of the Chinese political system – which appears to be locked on a collision course with America.

http://www.financialsense.com/contributors/jr-nyquist/2011/09/06/when-th...

Tue, 08/18/2015 - 01:21 | 6438097 laomei
laomei's picture

You're basically copy pasting falungong nonsense at this point, you have no fucking clue what you're talking about.

Tue, 08/18/2015 - 04:04 | 6438230 Apostate2
Apostate2's picture

Oh, the all powerful Falungong. LOL. Get another talking point, this one is past its sell-by-date.

You could even read a bit, or talk to your Chinese wife and get some basic translations on weibo.

Well, I take that back since the Great Firewall and your inability to read Chinese keeps you all comfy and well, fire walled. Enjoy. 

Tue, 08/18/2015 - 04:14 | 6438235 laomei
laomei's picture

no they are not all powerful, they have essentially zero power and a still pissy about that.  the only thing they can do anymore is blast out links to bullshit on ET, which is where this fake story originated. sorry, but you're full of shit just like your little lunzi shitstain faggots

Tue, 08/18/2015 - 05:22 | 6438262 Apostate2
Apostate2's picture

Let me return the compliment. You are 'full of shit' and a 'shitstain faggot' for perpetuating all that blather without understanding what the original post was about. It all started when some poster called you out and said your analysis was nonsense. Then you mis-directed to the Falungong (an obvious hate group for you). I called you out for the misdirection and now you are making scatological and presumptive comments about me. I don't mind because you have exposed yourself as an illiterate as well as a phony. But then you should be used to that designation.

Take care Laomei.

Tue, 08/18/2015 - 01:58 | 6438146 hedgiex
hedgiex's picture

It is going to be interesting if the horrors of Wars can be avoided. A crumblng Empire (US) indebted and bankrupt in idelogical appeals with a free market system under captives by its own autocrats. This is a face-off with China still so steeped in cultural superiority that it thinks that outside of its borders will be the panacea for civilizations. What a deluded pipe-dream ? Herein lies its greatest weakness which is the inabilty to melt the talents of different cultures to forge Creativity and Technological prowess. Pride has always set it back and this time it is no different, they are not on a journey of progress but regressing within the warm wombs of a recent win from an export gargantum funded by the greed and indiscipline of the West. There is no inspiring leadership that break the yoke of a self satiated command and control structure that carries with it all the fault llines of inflexibilities and concentrated risks. Not a model for a much globalized world with its internets.

Survive within the crevices with the opportunities from ongoing volatilities (an insurance that trading is not dead). Avoid long term investments in the peripherals like SE Asia who is even more pathetic with still infightings in the midst of fierce headwinds. All infrastrutures there will soon be modern day Acropolis. 

Tue, 08/18/2015 - 02:18 | 6438154 laomei
laomei's picture

China has the New Silk Road

The US has TPP, TTIP and TISA

 

The Silk Road thing would be financed by the AIIB and other similar things. It's a multi-decade development project that would funnel a shitload of cash into various economies for the "one belt one road" concept.  This gives an outlet for Chinese overcapacity, jobs for the locals, and some good old fashioned serious debt for all those involved.  If it happens, it sets China up as a global hub for all trade that matters.  It's not imaginary how much trade this would generate.  It allows China to export the dirty factories while still controlling them and focusing more on the trading and higher value goods.  The Berlin-Baghdad railway was a trigger for WWI, this is something far grander, once set in motion with the cash flowing and participating countries seeing the immediate benefits, it's not gonna stop.

 

The TPP, TTIP, TISA, etc.  This is more or less a power play to ensure that the US decides the rules of trade, isolates China, and sees the greatest benefits.  What has leaked is god fucking awful 1984 brave new world type shit.  With a starting point like that, even negotiating seems like a fucking joke for everyone who is not the US.  Why would they be doing it?  It's all reset related, that's the only answer.  Shit's gonna get bad and they'll have to choose who owns them going forward.  China or the US.  That's really all it comes down to.  

 

Actual shooting war is unlikely, neither side is willing to eat the losses involved.  The PRC needs flash gear and troops that give the illusion of power.  And the US has a bunch of gear that is safe-queen shit.  Losing any of it would be devastating for many reasons and neither side really wants to go nuclear for obvious reasons.  I can see this going Currency, Trade and Proxy war without much problem though.

Tue, 08/18/2015 - 00:33 | 6438023 HL Shancken
HL Shancken's picture
Speech By Comrade Chi Haotian
Vice-Chairman Of China's 
Military Commission
December, 2005
3-1-9
 
The following is the actual text of a speech delivered in December, 2005 by Comrade Chi Haotian ­the Vice-Chairman of China's Military Commission to top officers and generals. 
 
"Comrades, I'm very excited today, because the large-scale online survey sina.com that was done for us showed that our next generation is quite promising and our Party's cause will be carried on. In answering the question, "Will you shoot at women, children and prisoners of war," more than 80 per cent of the respondents answered in the affirmative, exceeding by far our expectations. Today I'd like to focus on why we asked sina.com to conduct this online survey among our people. My speech today is a sequel to my speech last time, during which I started with a discussion of the issue of the three islands [Taiwan, Diaoyu Islands and the Spratley Islands --- Ott] and mentioned that 20 years of the idyllic theme of 'peace and development' had come to an end, and concluded that modernization under the saber is the only option for China's next phase. I also mentioned we have a vital stake overseas. The central issue of this survey appears to be whether one should shoot at women, children and prisoners of war, but its real significance goes far beyond that. Ostensibly, our intention is mainly to figure out what the Chinese people's attitude towards war is: If these future soldiers do not hesitate to kill even noncombatants, they'll naturally be doubly ready and ruthless in killing combatants. Therefore, the responses to the survey questions may reflect the general attitude people have towards war..We wanted to know: If China's global development will necessitate massive deaths in enemy countries; will our people endorse that scenario? Will they be for or against it?
 
The fact is, our 'development' refers to the great revitalization of the Chinese nation, which, of course, is not limited to the land we have now but also includes the whole world. As everybody knows, according to the views propagated by the Western scholars, humanity as a whole originated from one single mother in Africa. Therefore no race can claim racial superiority. However, according to the research conducted by most Chinese scholars, the Chinese are different from other races on earth. We did not originate in Africa. Instead, we originated independently in the land of China. Therefore, we can rightfully assert that we are the product of cultural roots of more than a million years, civilization and progress of more than ten thousand years, an ancient nation of five thousand years, and a single Chinese entity of two thousand years. This is the Chinese nation that calls itself 'descendants of Yan and Huang.'
 
During our long history, our people have disseminated throughout the Americas and the regions along the Pacific Rim, and they became Indians in the Americas and the East Asian ethnic groups in the South Pacific. We all know that on account of our national superiority, during the thriving and prosperous Tang Dynasty our civilization was at the peak of the world. We were the centre of the world civilization, and no other civilization in the world was comparable to ours. Later on, because of our complacency, narrow-mindedness, and the self-enclosure of our own country, we were surpassed by Western civilization, and the centre of the world shifted to the West.
 
In reviewing history, one may ask: Will the centre of the world civilization shift back to China? Actually, Comrade Liu Huaqing made similar points in early 1980's Based on an historical analysis, he pointed out that the centre of world civilization is shifting. It shifted from the East to Western Europe and later to the United States; now it is shifting back to the East. Therefore, if we refer to the 19th Century as the British Century and the 20th century as the American Century, then the 21st Century will be the Chinese Century! (Wild applause fills the auditorium.)
 
Our Chinese people are wiser than the Germans because, fundamentally, our race is superior to theirs. As a result, we have a longer history, more people, and larger land area. On this basis, our ancestors left us with the two most essential heritages, which are atheism and great unity. It was Confucius, the founder of our Chinese culture, who gave us these heritages. These two heritages determined that we have a stronger ability to survive than the West. That is why the Chinese race has been able to prosper for so long. We are destined 'not to be buried by either heaven or earth' no matter how severe the natural, man-made, and national disasters. This is our advantage. Take response to war as an example. The reason that the United States remains today is that it has never seen war on its mainland. Once its enemies aim at the mainland, the enemies would have already reached Washington before its congress finishes debating and authorizes the president to declare war. But for us, we don't waste time on these trivial things. Maybe you have now come to understand why we recently decided to further promulgate atheism. If we let theology from the West into China and empty us from the inside, if we let all Chinese people listen to God and follow God, who will obediently listen to us and follow us? If the common people don't believe Comrade Hu Jintao is a qualified leader, begin to question his authority, and want to monitor him, if the religious followers in our society question why we are leading God in churches, can our Party continue to rule China??
 
The first pressing issue facing us is living space. This is the biggest focus of the revitalization of the Chinese race. In my last speech, I said that the fight over basic living resources (including land and ocean) is the source of the vast majority of wars in history. This may change in the information age, but not fundamentally. Our per capita resources are much less than those of Germany's back then. In addition, economic development in the last twenty-plus years had a negative impact, and climates are rapidly changing for the worse. Our resources are in very short supply. The environment is severely polluted, especially that of soil, water, and air. Not only our ability to sustain and develop our race, but even its survival is gravely threatened, to a degree much greater than faced Germany back then Anybody who has been to Western countries knows that their living space is much better than ours. They have forests alongside the highways, while we hardly have any trees by our streets. Their sky is often blue with white clouds, while our sky is covered with a layer of dark haze. Their tap water is clean enough for drinking, while even our ground water is so polluted that it can't be drunk without filtering. They have few people in the streets, and two or three people can occupy a small residential building; in contrast our streets are always crawling with people, and several people have to share one room.
 
Many years ago, there was a book titled Yellow Catastrophes. It said that, due to our following the American style of consumption, our limited resources would no longer support the population and society would collapse once our population reaches 1.3 billion. Now our population has already exceeded this limit, and we are now relying on imports to sustain our nation. It's not that we haven't paid attention to this issue. The Ministry of Land Resources is specialized in this issue. But we must understand that the term 'living space' (lebenstraum) is too closely related to Nazi Germany.
 
The reason we don't want to discuss this too openly is to avoid the West's association of us with Nazi Germany, which could in turn reinforce the view that China is a threat. Therefore, in our emphasis on He Xin's new theory, 'Human Rights are just living rights' we only talk about 'living' but not 'space' so as to avoid using the term 'living space.' From the perspective of history, the reason that China is faced with the issue of living space is because Western countries have developed ahead of Eastern countries. Western countries established colonies all around the world, therefore giving themselves an advantage on the issue of living space. To solve this problem, we must lead the Chinese people outside of China, so that they can develop outside of China.
 
Would the United States allow us to go out to gain new living space? First, if the United States is firm in blocking us, it is hard for us to do anything significant to Taiwan and some other countries! Second, even if we could snatch some land from Taiwan, Vietnam, India, or even Japan, how much more living space can we get? Very trivial! Only countries like the United States, Canada and Australia have the vast land to serve our need for mass colonization.
 
Therefore, solving the 'issue of America' is the key to solving all other issues. First, this makes it possible for us to have many people migrate there and even establish another Chinaunder the same leadership of the CCP. America was originally discovered by the ancestors of the yellow race, but Columbus gave credit to the White race. We the descendants of the Chinese nation are ENTITLED to the possession of the land! It is historical destiny that China and United States will come into unavoidable confrontation on a narrow path and fight. In the long run, the relationship of China and the United States is one of a life-and-death struggle. Of course, right now it is not the time to openly break up with them yet. Our reform and opening to the outside world still rely on their capital and technology. We still need America. Therefore, we must do everything we can to promote our relationship with America, learn from America in all aspects and use America as an example to reconstruct our country. Only by using special means to 'clean up' America will we be able to lead the Chinese people there. Only by using non-destructive weapons that can kill many people will we be able to reserve America for ourselves.
 
There has been rapid development of modern biological technology, and new bio weapons have been invented one after another. Of course we have not been idle; in the past years we have seized the opportunity to master weapons of this kind. We are capable of achieving our purpose of 'cleaning up' America all of a sudden. When Comrade Xiaoping was still with us, the Party Central Committee had the perspicacity to make the right decision not to develop aircraft carrier groups and focused instead on developing lethal weapons that can eliminate mass populations of the enemy country. Biological weapons are unprecedented in their ruthlessness, but if the Americans do not die then the Chinese have to die. If the Chinese people are strapped to the present land, a total societal collapse is bound to take place. According to the computations of the author of Yellow Peril, more than half of the Chinese will die, and that figure would be more than 800 million people! Just after the liberation, our yellow land supported nearly 500 million people, while today the official figure of the population is more than 1.3 billion. This yellow land has reached the limit of its capacity. One day, who know how soon it will come, the great collapse will occur any time and more than half of the population will have to go.
 
It is indeed brutal to kill one or two hundred million Americans. But that is the only path that will secure a Chinese century, a century in which the CCP leads the world. We, as revolutionary humanitarians, do not want deaths, But if history confronts us with a choice between deaths of Chinese and those of Americans, we'd have to pick the latter, as, for us, it is more important to safeguard the lives of the Chinese people and the life of our Party. The last problem I want to talk about is of firmly seizing the preparations for military battle. The central committee believes, as long as we resolve the United States problem at one blow, our domestic problems will all be readily solved. Therefore, our military battle preparation appears to aim at Taiwan, but in fact is aimed at the United States, and the preparation is far beyond the scope of attacking aircraft carriers or satellites. Marxism pointed out that violence is the midwife for the birth of the new society. Therefore war is the midwife for the birth of China's century."

Tue, 08/18/2015 - 01:35 | 6438114 laomei
laomei's picture

This is falungong nonsense that they made up and posted around the net in 2005.  Even your dates for the alleged speech are wrong.  It plays to detractors of China while being utter nonsense.  It's typical FLG bullshit an it's sad and pathetic that you seem to have actually bought into it.  Jesus you are a fucking moron.

Tue, 08/18/2015 - 01:42 | 6438130 HL Shancken
HL Shancken's picture

Is it? What makes you say that? Could it be fealty to the Chinese Communist Party regime? I think it could be.

Tue, 08/18/2015 - 01:52 | 6438139 laomei
laomei's picture

because it's falun gong bullshit and was exposed as such long ago.  get a fucking life.

Tue, 08/18/2015 - 06:13 | 6438282 Apostate2
Apostate2's picture

Why this rabid defense of Chi Haotian? What is the agenda? Why the deflection?

Answer that, and eschew your misdirection to the Falungong--who don't matter by your own admission (and no one else btw). 

Chi Haotian (aged in the late 80s) is not the issue. Tell us your 'Laomei' secret info as to why things are going down the way they are. Perhaps you need a few more years in studying Chinese. Maybe focus on the newspapers because Weibo is out of your competence. Ask the wife. 

Obviously to me you are a phony and a shill.

Prove me wrong.

Tue, 08/18/2015 - 03:51 | 6438223 Apostate2
Apostate2's picture

Sorry sport (or fellow traveler). His speech was widely reported and there are other speeches as he was part of the PLA propaganda--i.e. 'Communications/ Xinhua dept.. He served in the Korean campaign and rose to his position after he was one of the heavies that squashed the 1989 protests, from his base in Jinan. He is allied to Jiang Zemin allied to the Shandong faction, that now are under fire from Mr Xi. He was a pro-soviet supporter and at his great age still spews the China Uber Alles meme and trotted out, at times, to stoke the fires .

Tue, 08/18/2015 - 03:57 | 6438227 laomei
laomei's picture

Nope, it wasnt.  It was pumped out on random falungong outlets then copy pasted on bullshit sites.  Just because you copy paste the same bullshit over and over again all over worthless sites doesnt make it real.  Sorry dipshit.

Tue, 08/18/2015 - 04:13 | 6438234 Apostate2
Apostate2's picture

Well old american, I never posted any sites. As you do not read Chinese and you obviously, in your own very special dipshit manner, have no idea about the subject except to push an agenda, I suggest you give us the sources for your opinions. Chi is  a very interesting study in the current situation.

Do enlighten us all.

Tue, 08/18/2015 - 04:23 | 6438240 laomei
laomei's picture

fuck off lunzi, go suck on li hongzhi's micropenis some more

Tue, 08/18/2015 - 05:04 | 6438257 Apostate2
Apostate2's picture

Oh, what a pathetic response. You definetly have a emotional problem with the almighty Falungong. (LOL).

You do know that 'Lunzi" is yan lun zi you, i.e., 'freedom of speech' some thing you are obviously unacquainted with. The only one 'sucking' Li Hongzhi's member is you. Keep it up 

Tue, 08/18/2015 - 05:08 | 6438260 laomei
laomei's picture

and there you go and prove my point.  useless little faggot lunzi

Tue, 08/18/2015 - 05:43 | 6438268 Apostate2
Apostate2's picture

Yes indeed, I have proved your point that you are clueless and probably an obsessive and idiotic, about the current situation. Your mis-directions to "falunggun' is so  'faggoty' and so talking points. I hope you are well paid for the mis-direction, faggoty or not.

You know, if you could get your head around the fact that you are deficient in information and analysis about the subject of the post on ZH you might have something to say.

Attacking me is just your demise. 

 

Tue, 08/18/2015 - 01:09 | 6438073 bid the soldier...
bid the soldiers shoot's picture

China Global Shock Absorber?   HARDLY.  

China is more the like the third man in the line up, getting on base with one arm tied behind his back.  But the Babe, Jolting Joe, the Clean Up Hitter, suddenly can't get a hit to save his life.

The glue factory is beckoning.

Who knows?  

Maybe Shoeless Joe Obama is doing a Black Sox of 1919. Taking a dive. Except the stakes this time are humanity itself.

 

 

Margin Debt increased 7 straight days?

Sumpin tells me this margin debt has been taken on by a completely different cast of characters than the ones that started the spike at the end of 2014.  Players that know the Shanghai Index is going back up.  

And all the shorts in suspended stocks will find that when those stocks do resume trading the 'asking prices' are going to be a lot higher than they were when those stocks were suspended.

 

 

 

 

Tue, 08/18/2015 - 01:11 | 6438077 matermaker
matermaker's picture

I kept being hautned by the "one minute to midnight article"  largely because I was a huge iron maiden fan growing up.  I just went back and watched the video from 1984 with new eyes.  Two things stood out at me.  The conference room is being set up for internet video chat.  This is WELL before the net was invented.  I grew up a mile from mission control.  I was privy to the invention of the net.  In '84, the best you could muster in the civilian realm was BBS or bulletian board service.  We actually were putting an old fashoned rotary dial telephones in a cradel modem at 9600 baud.  The second is the currencies in the briefcase of money that gets opened up.  American Dollars, Queen on the front sterling and someting else.  most exceleent foreshadowing.

Tue, 08/18/2015 - 04:13 | 6438233 Tic tock
Tic tock's picture

The premise that hiking i% will be deflationary is not entirely accurate. The global fiscal environment sees little in way of yield right now. A rise in US i% would be better for the real economy and for Banking tier1. ..financial instrument re-valuation need also not be utterly gutted, on much the same basis. ...further, in terms of Ag.Demand, falling prices may indeed ordinarily translate into lower GDP, but it's the improvement in Investment and Savings that ought to be stimulated by rising i%. - as it could signal a return to a normal Credit environment. The central obstacle - the gun to Democracy's head - are the Zombie banks. Since they cannot be wound down - a small rate increase should help determine what measures could return these institutions to functionally-operative. I expect them to make huge losses.

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